Households are urged to adjust their personal finances as mortgage interest rates are set to double.

CoreLogic NZ's latest property market and economic update confirms sales activity continued to drop through the second half of 2021 and became 'genuinely weak' as the trend extended into the first quarter of the year.

Higher interest rates, lower sales volumes, and flatter house prices were forecast for the rest of the year.

The common drivers of the widespread post-Covid upswing in property values, including low mortgage rates and tight supply, were no longer in play, as the total number of listings available were up due to a slowdown in sales activity.

First quarter property sales volumes were the weakest in about a decade.

"It's still going to be harder to get a new mortgage this year than it has been for some time, and there's also a large refinancing wave to come through too, with about 50 percent of existing loans fixed but due to roll over this year," CoreLogic chief property economist Kelvin Davidson said.

"These borrowers will generally be facing a much higher repayment schedule when they refinance."

Davidson said rising debt levels were also a concern and many households would be forced to adjust their finances fairly quickly, following the doubling of mortgage rates and the country's high household debt to income ratio.

"Higher mortgage rates and reduced credit availability is having a significant impact on sales," Davidson said.

"We expect property market activity will continue to be subdued, with sales volumes perhaps declining by as much as 10 percent this year, and another 5 percent or so in 2023."

He characterised the market as slowing rather than a serious downturn.

"If unemployment stays low, we don't anticipate significant or widespread falls in property values."

Davidson said there were be some regional differences with some parts of the country more vulnerable to a fall in values than others.

"There are many factors that will influence each region over the coming year or so. But parts of Canterbury certainly have affordability on their side, so could see further, albeit modest, growth," he said.

"By contrast, many smaller markets in the central and lower North Island already look stretched, so could be poised to underperform."